Texas Department of Aging and Disability Services Agrees to $1.6 Million Settlement Over 2015 Data Breach

The Department of Health and Human Services’ Office for Civil Rights has agreed to settle a HIPAA violation case with the Texas Department of Aging and Disability Services (DADS) to resolve HIPAA violations discovered during the investigation of a 2015 data breach that exposed the protected health information of 6,617 Medicaid recipients.

The breach was caused by an error in a web application which made ePHI accessible over the internet for around 8 years. DADS submitted a breach report to OCR on June 11, 2015.

OCR launched an investigation into the breach to determine whether there had been any violation of HIPAA Rules. On July 2015, OCR notified DADS that the investigation had revealed there had been multiple violations of HIPAA Rules.

DADS was deemed to have violated the risk analysis provision of the HIPAA Security Rule – 45 C.F.R. § 164.308(a)(1)(ii)(A) – by failing to conduct a comprehensive, organization-wide risk analysis to identify potential risks to the confidentiality, integrity, and availability of ePHI.

There had also been a failure to implement appropriate technical policies and procedures for systems containing ePHI to only allow authorized individuals to access those systems, in violation of 45 C.F.R. § 164.308(a)(4) and 45 C.F.R. § 164.312(a)(1).

Appropriate hardware, software, and procedural mechanisms to record and examine information system activity had not been implemented, which contributed to the duration of exposure of ePHI – A violation of 5 C.F.R. § 164.312(b).

As a result of these violations, there was an impermissible disclosure of ePHI, in violation of 45 C.F.R. § 164.502(a).

The severity of the violations warranted a financial penalty and corrective action plan. Both were presented to the State of Texas and DADS was given the opportunity to implement the measures outlined in the CAP to address the vulnerabilities to ePHI.

The functions and resources that were involved in the breach have since been transferred to the Texas Health and Human Services Commission ( TX HHSC), which will ensure the CAP is implemented.

The State of Texas presented a counter proposal for a settlement agreement to OCR which will see the deduction of $1,600,000 from sums owed to HHSC from the CMS. The settlement releases HHSC from any further actions related to the breach and HHSC has agreed not to contest the settlement or CAP.

The settlement has been approved by the 86th Legislature of the State of Texas, but an announcement has yet to be made by OCR. If agreed, this will be the first 2019 HIPAA settlement between OCR and a HIPAA covered entity.

UPDATE: 11/07/2019: OCR has imposed a civil monetary penalty of $1.6 million on TX HHSC.

Author: Steve Alder has many years of experience as a journalist, and comes from a background in market research. He is a specialist on legal and regulatory affairs, and has several years of experience writing about HIPAA. Steve holds a B.Sc. from the University of Liverpool.